Article Summary
The article discusses the challenges faced by reverse mortgage professionals in the closing process, with a focus on appraisals and the Federal Housing Administration (FHA) requirement for second appraisals. The panel at the event in Irvine identified second appraisals and the reconsideration of value (ROV) process as key issues that can cause delays and strange requests for clients. The article also touches on the issue of appraisal bias and suggests solutions to mitigate the risks.
What This Means for You
- If you’re a reverse mortgage professional, it’s crucial to be aware of the second appraisal requirement and its impact on the closing process.
- Developing strategies to manage the ROV process can help mitigate potential delays and issues.
- Documenting experiences with appraisers and communicating with clients about their interactions with appraisers can also help to manage appraisal bias and ensure a smooth closing process.
- Exploring new technologies like Loom can help borrowers feel more prepared and confident during the appraisal process.
- Being vigilant and proactive in addressing potential appraisal issues can help to minimize risks and ensure a successful closing process.
Original Post
The article highlights the challenges faced by reverse mortgage professionals in the closing process, particularly in relation to second appraisals and the Federal Housing Administration (FHA) requirement. The panel in Irvine identified second appraisals as a major issue, leading to delays and strange requests for clients. The article also discusses the issue of appraisal bias, suggesting that appraisers may look at properties differently if they know the appraisal is for a reverse mortgage transaction. The panelists offered suggestions for managing these risks, including documenting experiences with appraisers and communicating with clients about their interactions with appraisers.
Second appraisals
The FHA announced a new requirement for HECM lenders in September 2018, resulting in some loan applications requiring a second appraisal. The rule aimed to stem losses to the Mutual Mortgage Insurance (MMI) Fund and went into effect for all case numbers assigned starting in October of that year. Opinions among reverse mortgage professionals about the second appraisal requirement have varied, but some continue to call it the single biggest issue they face in their business, as it can cause delays in the closing process.
Possible bias, preparation
Appraisal bias is a major issue that needs to be addressed. Some panelists suggested that appraisers may look at properties differently if they know the appraisal is for a reverse mortgage transaction. They advised being proactive in documenting experiences with appraisers and communicating with clients about their interactions with appraisers. This can help to manage the risks of appraisal bias and ensure a successful closing process.
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